nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2014‒11‒17
ten papers chosen by
Stan C. Weeber
McNeese State University

  1. A Theory of Political Entrenchment By Gilles Saint-Paul; Davide Ticchi; Andrea Vindigni
  2. Assessing the Political Impacts of a Conditional Cash Transfer: Evidence from a Randomized Policy Experiment in Indonesia. By Julia, Tobias; Sumarto, Sudarno; Moody, Habib
  3. Political Bargaining in a Changing World By Juan Ortner
  4. A Theory of Political Accountability and Journalism By Bruns, Christian; Himmler, Oliver
  5. Intergenerational Cooperation: an Experimental Study on Beliefs By Kulesz, Micaela M.; Dittrich, Dennis A. V.
  6. Political Campaigns and Big Data By Nickerson, David W.; Rogers, Todd
  7. Identifying latent interest-groups: An analysis of heterogeneous preferences for income-redistribution By Pfarr, Christian; Schmid, Andreas; Mørkbak, Morten Raun
  8. Stochastic stability in coalitional bargaining problems By Sawa, Ryoji
  9. Leaders as Role Models for the Voluntary Provision of Public Goods By Simon Gaechter; Elke Renner
  10. Adaptation to Climate Change and International Mitigation Agreements with Heterogeneous Countries By Hongxiu Li; Horatiu A. Rus

  1. By: Gilles Saint-Paul; Davide Ticchi; Andrea Vindigni
    Abstract: We develop a theory of endogenous political entrenchment in a simple two-party dy- namic model of income redistribution with probabilistic voting. A partially self-interested left-wing party may implement (entrenchment) policies reducing the income of its own constituency, the lower class, in order to consolidate its future political power. Such poli- cies increase the net gain that low-skill agents obtain from income redistribution, which only the Left (but not the Right) can credibly commit to provide, and therefore may help offsetting a potential future aggregate ideological shock averse to the left-wing party. We demonstrate that political entrenchment by the Left occurs only if incumbency rents are sufficiently high and that low-skill citizens may vote for this party even though they ratio- nally expect the adoption of these policies. We also discuss the case where the left-wing party may have the incentive to ex-ante commit to not pursue entrenchment policies once in power. Finally, we show that, in a more general framework, the entrenchment policies can be implemented also by the right-wing party. The comparative statics analyzes the effects of state capacity, a positive bias of voters for one party and income inequality on the incentives of the incumbent party to pursue entrenchment policies. The importance of our theory for constitutionally legislated term limits is also discussed. The theory sheds light on why left-wing parties or politicians often support liberal immigration policies of unskilled workers, are sometime in favor of free trade with less developed economies and of globalization more generally, or fail to reform plainly "dysfunctional" public educational systems damaging the lower classes.
    Keywords: Political entrenchment; constituencies; inequality; inefficient redistribu- tion; checks and balances; political rents; state fiscal capacity
    JEL: D72 P16
    Date: 2014
  2. By: Julia, Tobias; Sumarto, Sudarno; Moody, Habib
    Abstract: Several developing nations, including Indonesia, have experimented with conditional cash transfers (CCTs) to poor households during recent years. Since 2007, Indonesia has been carrying out a randomized CCT pilot program (PNPM Generasi) in 1,625 villages where funds are disbursed to communities rather than households, and local councils allocate the funds to public projects following community input. In this paper, we explore political outcomes associated with the program, including electoral rewards for incumbents, and political participation. By comparing regions receiving the program with a control group, we estimate the CCT’s effects on political behavior in the 2009 elections for President and the national legislative assembly, and we also explore its effects on local politics. We find that the CCT program increases vote shares for legislative candidates from the incumbent president’s party, improves households’ satisfaction with district-level government administrative services, and decreases competition among presidential candidates as measured by the Herfindahl- Hirschman Index (HHI). We do not find conclusive evidence to support the hypothesis that the program increases votes for the incumbent President, and we find no evidence that the program significantly increases voter turnout or affects village-level politics.
    Keywords: Conditional Cash Transfer, Political behavior, Indonesia
    JEL: H3 H42 I3
    Date: 2014–02–03
  3. By: Juan Ortner (Boston University)
    Abstract: This paper studies negotiations between two parties whose political power changes over time. The model has a unique subgame perfect equilibrium, which becomes very tractable when parties can make offers frequently. This tractability facilitates studying how changes in political power affect implemented policies. An extension of the model analyses how elections influence inter-party negotiations when implemented policies affect the parties’ political power. Long periods of gridlock may arise when the time left until the election is short and parties have similar levels of political power.
    Date: 2014
  4. By: Bruns, Christian; Himmler, Oliver
    Abstract: Journalism is widely believed to be crucial for holding elected officials accountable. At the same time economic theory has a hard time providing a straightforward explanation for the phenomenon of "accountability journalism". According to the common Downsian reasoning, rational voters should not be willing to pay for information out of purely instrumental motives because the individual probabilities of casting the decisive vote are typically very low. We show that this rationale does not apply when a group of voters shares a common goal such as accountability and information is delivered via mass media. In contrast to the pessimistic Downsian view, rational voters can have a considerable willingness to pay journalists for the provision of instrumental information in these scenarios. Our model thus reconciles the rational voter approach with the common perception of journalism as a watchdog that holds elected officials accountable. We also show that competition does not lead to more information and accountability, and that entertainment can crowd out informative media content.
    Keywords: accountability, elections, information, media
    JEL: D72 D83 H41 L86
    Date: 2014–09
  5. By: Kulesz, Micaela M.; Dittrich, Dennis A. V.
    Abstract: We report on an experiment in which subjects older than 55 years old and subjects younger than 26 years old play repeatedly 4 versions of the centipede game. For each game we define four treatments that allow us to study cooperation and belief formation of these two age groups. We find that beliefs about the others' age group shape the outcome: while seniors are cooperative and generous with juniors when they incur lower opportunity costs, for juniors it is when playing with seniors that they learn the way to the theoretical solution by smoothly decreasing their cooperation levels.
    Keywords: Centipede Game, Age differences, Decision Making, Beliefs, Social Preferences.
    JEL: C9
    Date: 2014–04
  6. By: Nickerson, David W. (University of Notre Dame); Rogers, Todd (Harvard University)
    Abstract: Modern campaigns develop databases of detailed information about citizens to inform electoral strategy and to guide tactical efforts. Despite sensational reports about the value of individual consumer data, the most valuable information campaigns acquire comes from the behaviors and direct responses provided by citizens themselves. Campaign data analysts develop models using this information to produce individual-level predictions about citizens' likelihoods of performing certain political behaviors, of supporting candidates and issues, and of changing their support conditional on being targeted with specific campaign interventions. The use of these predictive scores has increased dramatically since 2004, and their use could yield sizable gains to campaigns that harness them. At the same time, their widespread use effectively creates a coordination game with incomplete information between allied organizations. As such, organizations would benefit from partitioning the electorate to not duplicate efforts, but legal and political constraints preclude that possibility.
    Date: 2013–11
  7. By: Pfarr, Christian; Schmid, Andreas; Mørkbak, Morten Raun
    Abstract: The German government is strongly involved in redistributing income. For various reasons such as the capacity to govern and social stability this makes a good un-derstanding of the citizens’ respective preferences and their informal coalitions ex-tremely important. The identification of such interest groups is non-trivial as they may be determined by latent characteristics and preferences for redistribution are difficult to measure. The aim of this study is to identify latent interest-groups in the context of preferences for redistribution adopting an inductive approach. The data for the estimation of the WTP values is generated by a DCE, based on a rep-resentative sample of 1,538 German individuals. To identify the latent interest-groups we investigate to which extent respondents can be divided into groups us-ing Latent Class Models thereby accounting for both observable and unobservable heterogeneity within the society. Based on the econometric analysis we can identi-fy six social interest groups that differ regarding their preferences for redistribu-tion and their composition. Both, their preferences regarding the overall budget for redistribution and their preferences regarding the different recipient groups as well as the socio-demographic determinants for group membership are plausible and match well with the current political situation in Germany.
    Keywords: redistribution; interest groups; preferences; choice experiments; latent class models
    JEL: C93 D31 D72
    Date: 2014–09
  8. By: Sawa, Ryoji
    Abstract: This paper examines a dynamic process of n-person coalitional bargaining problems. We study the stochastic evolution of social conventions by embedding a static bargaining setting in a dynamic process; Over time agents revise their coalitions and surplus distributions in the presence of stochastic payoff shocks which lead agents to make a suboptimal choice. Under a logit specification of choice probabilities, we find that the stability of a core allocation decreases in the wealth of the richest player, and that stochastically stable allocations are core allocations which minimize the wealth of the richest.
    Keywords: Stochastic stability; Coalitions; Logit-response dynamics; Bargaining.
    JEL: C71 C72 C73 C78
    Date: 2014–05–11
  9. By: Simon Gaechter (School of Economics, University of Nottingham); Elke Renner (School of Economics, University of Nottingham)
    Abstract: We investigate the link between leadership, beliefs and pro-social behavior. This link is interesting because field evidence suggests that people’s behavior in domains like charitable giving, tax evasion, corporate culture and corruption is influenced by leaders (CEOs, politicians) and beliefs about others’ behavior. Our framework is an experimental public goods game with a leader. We find that leaders strongly shape their followers’ initial beliefs and contributions. In later rounds, followers put more weight on other followers’ past behavior than on the leader’s current action. This creates a path dependency the leader can hardly correct. We discuss the implications for understanding belief effects in naturally occurring situations.
    Keywords: Leadership, beliefs, experiments, public goods, path dependency, public policy, management.
  10. By: Hongxiu Li (Department of Economics, University of Waterloo); Horatiu A. Rus (Department of Economics, University of Waterloo)
    Abstract: This paper investigates the impact of adaptation on a country's incentive to participate in emission-reducing International Environmental Agreements (IEAs) on climate change. We develop a framework where heterogeneity across countries is introduced with respect to the benefits and costs of both mitigation of emissions and adaptation to reduce the impact of climate change. The paper uses two coalition stability concepts and numerical simulations to look at stable coalitions. We also study the effect of an within-coalition increase in the efficiency of adaptation on emissions and on countries' incentives to cooperate. Our main findings are: first, investment in adaptation technology has a public good feature inside the coalition, compared to being strictly a private good in the non-cooperation case. Second, a large coalition cannot be achieved if countries differ much in terms of vulnerability. Third, cooperation incentives can be enhanced by a coalition which diffuses technological progress on climate change adaptation among its members.
    JEL: H41 Q54 Q59
    Date: 2014–10

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